People walk by a sign displaying TSX information in Toronto, August 17, 2009. REUTERS/Mark Blinch

The market, which has been roiled by the U.S. Federal Reserve’s plans to tighten monetary policy, extended its slide from last week, when it lost 1.6 percent.

Worries about a crisis in the Chinese banking system and the ability of the country to deal with a slowing economy have intensified. Those concerns caused the price of bullion to drop about 1 percent and triggered a 4.2 percent fall in shares of gold miners.

The Canadian market, with its large exposure to materials and energy stocks, has been reacting sharply to news out of China, a major destination for resource exports.

“The markets are in a risk aversion phase. They are going to take a wait-and-see approach,” said Youssef Zohny, portfolio manager at Stenner Investment Partners, a unit of Richardson GMP.

Investors are trying to re-price Chinese economic growth and liquidity concerns to some extent, he said, adding they were more than anything looking for stability in commodity prices.

The index is down 4.8 percent since the start of the year, offering a contrast to solid gains made by other major global indices, such as the S&P 500 .SPX.

Canadian investors in general see no clear direction, said Matt Skipp, president of SW8 Asset Management. “You’re invested in a financial system that’s based off monetary policy, you’re watching your yield securities plunge, and your equity portfolios don’t give much comfort.”

Every major sector on the index was in the red on Monday.

The materials sector, which includes mining stocks, gave back 3.8 percent.

Gold-mining stocks declined 4.2 percent.

Barrick Gold Corp (ABX.TO) fell 2.4 percent to C$17.28. The miner plans to lay off up to a third of its corporate staff at its headquarters in Toronto and other offices.

Energy shares lost 1.2 percent. Oil prices hit a three-week low earlier in the session but recovered as record flooding in Canada’s main oil producing province threatened exports to the United States. <O/R>

Financials, the index’s most heavily weighted sector, were down 0.5 percent. Insurer Manulife Financial Corp (MFC.TO) fell 2.9 percent to C$16.24 and played the biggest role of any single stock in leading the market lower.

But smartphone maker BlackBerry (BB.TO), which will report quarterly earnings later this week, added 2.8 percent to C$14.75. ($1=$1.05 Canadian)